The global diamond market was slow in September as key trading centers shut for Jewish and Indian holidays. Still, US retail sales remained strong ahead of the fourth-quarter festive season, supporting sentiment in the industry.
Polished prices continued their decline from the high levels they had occupied for much of this year. The RapNet Diamond Index (RAPI™) for 1-carat goods slipped 0.5% between September 1 and 29, while 0.30- and 0.50-carat stones fell 1.8% and 0.9%, respectively. The 3-carat category performed better, rising 0.3% during the same period.
Diamond manufacturers produced polished at a high rate ahead of the upcoming Diwali festival. Most factories in Surat close for an extended period during the Indian holiday, which this year takes place in early November. At the same time, the Gemological Institute of America (GIA) in Mumbai continued to operate with a backlog of around five weeks, creating supply challenges as the peak season approached.
The rough sector strengthened overall, though the situation was a mixed bag. Grib Diamonds reported a price increase of 5% to 7% at its September 23 Antwerp tender compared to its July sale, with larger yellows and other goods under 0.75 carats performing well. However, white diamonds of 2 carats or more dropped in price, the company noted.
Mountain Province, which owns 49% of the Gahcho Kué mine in Canada, also saw buoyant demand at its third-quarter sales. Revenue for the period came to $74.1 million, 41% higher than in the previous three months.
“We’re extremely pleased to see the strong price increases achieved at sales in the first half of 2021 continue into the third quarter,” commented Stuart Brown, Mountain Province’s CEO. “We expect the rough and polished markets to maintain momentum into the important holiday buying season, which should benefit our two remaining sales for the year.”
US retail up
The US propped up the industry as shoppers continued to return to stores and splurge online. Jewelry retail sales soared 74% year on year in August and were up 59% from the same month of 2019, according to Mastercard SpendingPulse, which tracks revenues across all forms of payment. The company also predicted a 59% year-on-year rise in jewelry sales for the upcoming holiday period spanning November 1 to December 24, and 53% growth compared with those dates in 2019.
There were indications that the recovery was slowing, however. Nationwide consumer confidence fell in September for the third consecutive month, according to data from The Conference Board, which attributed the trend to the spread of the coronavirus’s Delta variant.
“These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward,” commented Lynn Franco, The Conference Board’s senior director of economic indicators.
Eyes on China
Meanwhile, China showed signs of a slump ahead of Golden Week in early October, often a time when people travel and spend. The country’s retail sales grew 2.5% year on year in August, a modest increase relative to the sharp growth visible in earlier months. The slowdown stemmed from tight restrictions the government had imposed to counter a Delta outbreak during the summer, as well as from severe flooding that limited movement, according to the Global Times, which cited a spokesperson for China’s National Bureau of Statistics. Factory activity also contracted unexpectedly in September amid power shortages, according to media reports.
The industry’s focus is now firmly on the holiday season, which will likely determine, as ever, whether 2021 turns out to be a good or a bad year for the trade. Expectations are high, but the industry knows never to be too optimistic.
Article from the Rapaport Magazine - October 2021. To subscribe click here.